The evolution of a business

In my role as educational venture analyst, I compared Recombo in 2004 and 2005.

 

Brad MacPhee’s presentations in both years were convincing, although for different reasons. The initial pitch was a formal one, and as such it covered many of the key factors one would expect to see. I was impressed with the opening hook: ‘standards create markets’. Good, strong one-liners like that, which encapsulate the company’s value proposition in a single statement, are excellent indicators that the presenter thoroughly understands what they’re trying to do: convince me to invest my money. These hooks often stick with an EVA long after the graphs have faded.

 

Beyond the hook, however, I was impressed with the business case. There was a clear presentation of the gap they are trying to fill, and a multifaceted approach to filling that gap. In other words, the presentation was more than just hype, there was an underlying argument about why the software was invented, who needs it, and why Recombo can be successful selling it.

 

Finally, there was an impressive list of reviewer comments from industry heavy-hitters like Pearson and NETg. These were the types of potential customers for whom system incompatibility is a huge issue, so their enthusiasm was encouraging.

 

Following this presentation, I would ask for more detail about the product they produce. While Mr MacPhee laid out what sectors of the industry competition might come from, there was too little information given for me to judge how sustainable their competitive edge is.

 

The 2005 pitch was a much less formal one, but it too had some convincing elements. The speech about focus speaks to a lesson learned quickly and well. Successful businesses focus most of their attention on their core, and CEOs and management teams who are able to articulate that as their business evolves are way ahead of the game. The focus on proof was also heartening for a business at this stage, essentially on the edge of a big breakthrough. Mr MacPhee’s conviction that the next phase involved intensification of the relationship with their lighthouse customer, rather than looking for ‘the next big one’ articulates a sensible strategy that I felt very comfortable with. It was very clever to anticipate the problem with MindLeader’s possible unwillingness to share access to their customers and build in an incentive to change that behaviour. I was also very impressed with the way they were training their sales people to ask ‘Why isn’t this a connector sale?’ – encouraging critical reflection on the part of the sales staff rather than a knee-jerk response to engineer the problem away. The latter approach may make the customer happy in the short run, but Recombo would lose the opportunity to make them happy in the long run. Sometimes you serve everyone better if you take the long view!

 

The final piece that appealed to me was the consistency of the ethical tone – ‘play well with others’ was a theme that Mr MacPhee articulated in both an internal context and an external context, ie. it was both part of the corporate culture they were fostering amongst their employees (and were working to keep in the face of massive expansion) and integral to the way they structured their relationships with the customers.

 

My questions following this presentation would be the same: who is the competition? How hard are they coming after this business? How hard will the technology be to reproduce?

 

In sum, I would recommend moving to due diligence with Recombo.

September 12, 2008   6 Comments

Re Development Gateway Foundation

Can’t access  the development gateway foundation resources. Must we join?

 

Cheryl

September 12, 2008   3 Comments

Showrunner, Artist, Neophyte

 

I have taken up three videos for this analysis – Recombo, Ingenia and UBC.

 

The Showrunner

When I looked at Recombo’s 2nd (improved business model) video, Brad Mcphee strikes me as an entrepreneur – not only is he in control of what is happening at Recombo and is able to analyse the market trend and its implications for Recombo. He is one of the few who has an exit strategy. It is easy to see how he would score on the criteria laid out in our material – McPhee would score a neat 4 on a scale of 1(low)-5(high) on most (except competitive products – there wasn’t a mention of any of these in his spiel). I am tempted to cast him as the “showrunner”  who tends

 

to demonstrate enough know-how to convince…that ideas can be developed according to industry-standard practices…Though they may not have to best ideas, showrunners are those rare people in organizations who see the majority of their concepts fully implemented.”(Elsbach K., 2003, p. 4)

 

The question that comes to mind is what happens to a business plan that rides the “first in the marketplace” wave when competition catches up? I am referring to the DVD case study from YouTube link sent by DavidV (can’t find the link now – help me!). Two things that need to be addressed here in a technology related scenario – cost of technology will continue to decrease and competition will increase – should the 12 minute plan address this, how?

 

The Artist

 

I am tempted to cast Ingenia CEO as an artist – the “non-conformist” in our pitch pool for having displayed “single-minded passion and enthusiasm” about her idea of doing business in Vietnam. Her pitch is confidently delivered and as an EVA if I have to give an instant decision I would be tempted to go for Ingenia (Vietnam has made a strong business case past 5 years or so) but give it some thought – how have the following been addressed for a foreign market – country regulations for foreign business, consumer behaviour, market size, competition, country risk (language barrier, technology)? To my mind, these issues make a strong case for a robust business model (“tie-up with a foreign University campus” – isn’t one), expansion plan and an explicit exit strategy.

 

I sense a certain genuineness in this pitch and.I would go along with Elsbach’s about genuineness making the artist credible, but then we are in the business world where expecting the unexpected is the norm!  

 

Aside- I have lived in Vietnam for 3 years (2003-2006) and just concluded an education technology project with Vietnam schools funded by the Japan Social Fund and overseen by The World Bank – enjoyable as it is, the turf is tough!

 

The Neophyte

 

Ted Todds, CIO UBC, comes across as the neophyte because he presents himself as an eager learner, “…by asking directly and boldly for help –not in a desperate way but with the confidence of a brilliant favorite…” (Elsbach K., 2003, p. 7) in openly inviting and working with other campuses. If the intrapreneur must ask the question “Where is the better business in this” then Ted Todds has got it right. His credibility is high, has a good management team a sound business model.

 

In my view “e” models are organic – they are self-propagating and have the potential to grow exponentially (facilitated by the downward trend in technology prices over a period of time) – shouldn’t e-learning models then address ways in which they beat competition by increasing outreach (overseas students for instance)? If this is not adequately addressed isn’t there a danger of competition creeping up from behind to grab new markets when “on-campus” business is reaching saturation point?

 

I will look forward to all your thoughts while I set out to read the other posts.

 

Cheers!

 

Dee

 

Reference

 

Elsbach, K.(2003, September). How to Pitch a Brilliant Idea. Harvard Business Review, 81(9), 117-123. retrieved September 8, 2008, from Business Source Complete Database.

 

September 12, 2008   3 Comments